Dealers like Carl Keegan, Orange Motor’s vice president, are thrilled to move inventory after back-to-back years of slumping sales. But they also question whether automakers can pump up the volume enough to keep pace with demand.

“We are definitely seeing an influx of gas-conscious people. There are a couple of models I could run out of,” said Keegan, whose Ford Focus, Ford Fiesta, Mazda 3 and Mazda 2 are its best selling fuel-efficient vehicles.

The Albany dealership had $78.8 million in revenue in 2011, a 7.3 percent increase from 2010.

_____________

_____________

Compact-car sales through March are 41 percent higher than a year ago, far outpacing the industry’s overall 13 percent growth. Sales of subcompacts (think Ford Fiesta, Honda Fit and Chevy Sonic) are up 12 percent, according to LMC Automotive, a market research company in Detroit, Michigan.

Anticipating the demand, manufacturers in recent months powered up idling plants and stepped up production. What they didn’t anticipate was how quickly demand would take hold, said Joe Langley, a senior analyst at LMC.

Langley said that inventory for many of the popular small cars is still at below-average levels, and automakers will be scrambling to sustain strong production rates.

“Fuel is becoming a factor with just about everybody walking in the door,” said Marc Garvey. His Garvey Auto Group sells Volkswagens, Kias and Hyundais, brands that mostly cater to the small-vehicle segment of the market. All three brands finished March with the highest sales in Garvey’s history.

Overall 2011 revenue at the Queensbury dealership was $119 million, up 34 percent from the year before.

Garvey, who currently has an ample stock of fuel-efficient cars on his lots, said the scenario could change if U.S. car sales reach 14 million this year, a prediction that appears to be on target.

“Then, my guess is there will be shortages across the board. The days of 110-day supplies don’t exist anymore, so manufacturers can’t all of a sudden produce 15 to 20 percent more cars,” Garvey said.

Manufacturers, recovering from bankruptcies, near-bankruptcies and decades-low vehicle sales of 10.4 million in 2009 brought on by the financial crisis, have become more efficient by producing vehicles on “on time” schedules.

Still, their manufacturing processes have become so flexible that they are better able to adapt to market demand, said John Humphrey, senior vice president of global automotive operations at market research J.D. Power and Associates, headquartered in Thousand Oaks, Calif.

Credit restrictions on car loans, which started loosening in 2011, have eased even more in the last three months. As such, people with less-than stellar credit ratings have become eligible borrowers.

Those buyers tend to be younger, lower-wage earners whose budgets fit smaller, less expensive cars. That’s the profile of many of the car buyers who purchased a Ford Focus from Orange Motor.

“It’s really opened up the market,” Keegan said.

Through the first two months of the year, the most recent month available for the numbers, sales of compact and sub-compact cars accounted for 25 percent of all retail sales. That’s up from an average 15 percent.

The 40-mpg, basic 2012 Ford Focus sells for around $15,600, while the average price for a car during the first two months of this year was $27,953.

Those lower prices are fetching lower margins for dealers, who generate the bulk of new-car profits from extras, extended warranties and other added features.

The average U.S. car is 10.8 years old, and consumers who held off vehicle purchases during the recession are returning to the fold as the economy brightens.

______________

______________

Armory Chrysler Jeep Nissan Fiat has sold almost 130 Fiat 500s since the brand was rejuvenated less than a year ago by Milan, Italy-based Fiat SpA. Fiat also has controlling ownership of Chrysler LLC.

The Fiat, which averages 38 miles per gallon on the highway, drew immediate interest.

That interest created supply concerns for Donald Metzner, president of the dealership.

“Sales shot up so fast that we knew there would be production problems,” Metzner said. His Albany dealership had total revenue of $84.5 million in 2011, an increase of 20 percent from 2010.

Even with 50 Fiats on the lot, the tiny Italian subcompacts are going out quicker than they’re coming in. “They’re selling faster than Fiat can produce them,” Metzner said. He expects a shortage by early summer.

Meanwhile, Andy James, president of Rensselaer Honda in Troy, said the great push for fuel-efficient cars hasn’t happened yet. That will come, he said, when gas prices edge past $4.75.

“I think people are doing a lot of talking about buying now,” he said. “They’re not quite pulling the trigger, but they know the time is coming.”